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Wednesday, May 25, 2016

Plaintiffs are investors in defendant Toshiba who claim Toshiba's false accounting report caused loss. Plaintiffs alleged a claim both under U.S. law and Japanese law. The court found that plaintiffs failed to state a claim under Securities and Exchange Act of 1934, and dismissed the Japanese law claim based on comity and interest-balancing analysis.

Takeaway:

This is a fairly standard securities class action case, with one interesting twist--plaintiffs pleaded a cause of action under Japanese law, likely because they knew their Exchange Act claims were not strong. The tactic was enterprising, but I believe the court reached the correct result; the risk of having conflicting judgments with the Japanese courts (which were already handling a securities litigation with Toshiba involving the same fact pattern) was too great.